Let me make sure I’ve got this right: a Turkish mobile operator partly owned by Scandinavian and Russian interests is suing a South African operator in a US court over events alleged to have happened in Iran.
Yes, that seems to be correct. And suing for $4.2 billion, no less, which is more than a quarter of MTN’s 2011 revenues.
The background, in brief. In 2004 Turkcell received preliminary approval from the government of Iran to become the country’s second mobile operator. Iran subsequently withdrew its approval from Turkcell and in 2005 awarded the franchise to MTN, in partnership with a business entity widely thought to have ties to the Iranian military. Turkcell now alleges that MTN got the license as a result of a rather spectacular program of bribery and influence peddling with such highlights as:
- Orchestrating South Africa’s abstention on three UN votes on Iran’s nuclear program
- Cash payoffs to Iranian and South African government officials amounting to some $600,000
- A promise of helicopters and other South African military equipment, in contravention of the international arms embargo
Still, you may be asking what brings this to the U.S. District Court in the District of Columbia. If so, we’re glad you asked: it’s the “Alien Tort Statute”, which lay largely dormant for two centuries after George Washington signed it into law in 1789. It allows civil actions to be brought in US courts by a non-US citizen when a tort has been committed “in violation of the law of nations.”
It’s hard to see the District Court being particularly eager to open this can of worms; if nothing else, it has a pretty full docket of Americans suing Americans for things done in America. There’s a good chance it will decline to hear the case and Turkcell will be left without a venue.
But that may be cold comfort for MTN, which has already seen its stock price drop by 6% and its officers embarrassed by allegations of collaboration with the Iranian security apparatus in tracking down protesters through their call records. (In post-apartheid South Africa, this is a particularly serious accusation.)
- Even if it were tempted to do so, MTN can’t afford to simply walk away from Iran. It’s too important: about 9% of MTN’s 2011 profits came from Iran, and it is expected to account for 20% of net new subscribers in 2012.
See “Turkcell: Moving at a consistent pace in a challenging environment” and “MTN: Sticking to Africa after Failed Bharti Deal?”